FAR M10- Current Assets Liabilities参考.doc

Study Notes- FAR M8 (Long term construction contract) Current Asset Current assets are those that will be converted into cash within 12 months or within one operating cycle if the operating cycle is longer than 12 months This means that an asset that will be converted in 18 months may be classified as a current asset, but all assets that will be converted in less than 12 months will always be classified as current assets. Current Assets normally include: Cash Cash equivalents Inventories Receivables Certain securities (such as trading or available-for-sale securities if liquidation is anticipated within the operating cycle or one year, whichever is longer) Short-term investments maturing in less than one year Prepaid expenses Cash surrender value of life insurance. Cash surrender value of life insurance can be a current asset or a non-current asset depending on intent. If the policy owner intends to surrender the policy for its cash surrender value during the normal operating cycle, it would be a current asset; if the policy owner does not intend to surrender the policy, as is normal, it would be a non-current asset. If an insurance policy has a cash surrender value, any portion of the premium payment that does not add to that cash surrender value is expensed. Noncurrent Assets Noncurrent assets are those assets that will not be converted into cash within one year or during the operating cycle if the operating cycle is longer than one year. Cash and cash equivalent Students do need to know the definition of cash equivalent. Know the following table. Cash or Cash Equivalent Not Part of Cash ????????? Coin and currency on hand (petty cash) ????????? Legally restricted deposits ????????? Savings accounts ????????? NSF (non-sufficient fund) checks ????????? Checking account ????????? IOUs ????????? Certificate of Deposit with an original maturity of 3 months or less ????????? Time certificates of deposits (if original maturity greater than 90 days) ?????